Mauritius lender slumped to a four-year low on fraud allegations

SBM announced this week its Indian operations were the subject of a cyber fraud that could result in a maximum loss of $4 million. Photo: Bloomberg.

INTERNATIONAL – SBM Holdings slumped to a four-year low after the owner of Mauritius’s second-biggest lender said its uncovered another fraud at its operations.

The stock dropped as much as 7.7 percent and traded down 6.2 percent at 6.10 rupees by 12:52pm in Port Louis, the capital, the lowest since the holding company began trading on the Stock Exchange of Mauritius on October 6, 2014.

The shares have fallen 19 percent this year, under-performing the benchmark Semdex Index, which has risen 2 percent over the same period.

SBM announced this week its Indian operations were the subject of a cyber fraud that could result in a maximum loss of $4 million. It’s the second time since August that the financial-services company has had to deal with suspected embezzlement.

“The group is facing a series of unfortunate circumstances,” Neeraj Umanee, manager of Mauritian brokerage Swan Securities Ltd., said by phone. “Investors seem to grow weary of accumulation of such events at the banking level, which is reflected by the steep decline of the stock.”

AXYS Stockbroking Ltd. said Thursday it’s cut the stock to hold, from buy, and reduced its price target to 6.20 rupees from 7.59 rupees.

The stock’s decline is “a knee-jerk reaction from investors following the cyber fraud announcements,” said Bhavik Desai, head of research at AXYS. “There is growing support around six rupees per share.”